The USDJPY is close to a multiyear trend line form the highs in 2015 to the 109.10/20 level which is near the 88% Fibonacci retracement of the June 2020 high to the January 2021 low, as higher Treasury yields boosted demand for an already strong US Dollar.
Yesterday, during US trading hours the pair hit 108.93, a fresh 2021 high, with the DJIA and the S&P up and the Nasdaq down, providing further support to the pair. The Dow surged to fresh all-time highs, while the yield on the benchmark 10-year Treasury note stands at 1.60% as the day comes to an end.
On the news, Japan published the January Trade Balance, which posted a deficit of ¥-130.1 billion. The preliminary estimate of the Leading Economic Index beat expectations up to 99.1, while the Coincident Index came in at 91.7. Lastly, the February Eco Watchers Survey on the current situation printed at 41.3, missing expectations while the outlook improved to 51.3. This Tuesday, the country will publish the final reading of Q4 Gross Domestic Product, foreseen steady at 3% and February Machine Tool Orders.
The Dollar/Yen pair now trades near the high, ready to challenge the 109.50 figure, in spite of the extreme overbought readings. On the 4-hour chart, technical indicators have lost their bullish strength but remain within extreme levels. The 20 SMA keeps advancing below the current level, currently at around 108.00, while the longer ones advance well below it. The pair is extremely overbought in the daily chart, and a corrective decline is now on the cards.
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